UK: Property Taxes

Last Updated: 20 March 2014
Article by Smith & Williamson

The commentaries below are written in general terms. You are strongly recommended to seek specific advice before taking any action based on the information given, both in the commentaries and in the publication.

CGT principal private residence (PPR) relief – final period rule

A property that qualifies as an individual’s private residence for the purpose of PPR relief at some time during ownership is deemed to continue to do so during the final period of ownership. This is the case even if the individual is not living in the property at the time they dispose of it and even if they are claiming PPR relief on another property at the same time.

From 6 April 2014 the final period exemption will be reduced from 36 to 18 months.


The reduction in the final period was announced in the 2013 Autumn Statement. Since then, more detail on the reduction has been released.  Specifically, although the date of exchange remains key in determining whether the 36-month or 18-month final period applies, anti-avoidance rules will be included to prevent taxpayers exchanging contracts before 5 April 2014 but not completing until after 6 April 2015 and still benefiting from the 36 month final period.

Capital gains tax: non-residents

As announced in the 2013 Autumn Statement, a capital gains tax charge will be introduced from April 2015 on ‘future’ capital gains made by non-UK residents disposing of UK residential property.

The consultation document on this proposal has yet to be issued but is expected shortly.


As noted after the Autumn Statement, we will have to wait until the consultation is published to confirm the exact provisions.  It is hoped that the continuing reference to ‘future gains’ made by non-residents will result in an effective rebasing of properties at the date of the changes for non-UK residents caught by these provisions.

Changes to the taxation of high value UK residential property held by certain non-natural persons

Budget 2012 announced a trio of measures to deter the holding of high value UK residential property in companies and certain other ‘non-natural persons’ – so called ‘enveloping’. These were:

  • a new penal rate of Stamp Duty Land Tax (SDLT) of 15% on the acquisition of such properties by a relevant non-natural person;
  • an annual charge based on the value of the property; and
  • an extension to the capital gains charge to bring into charge gains on disposals of properties within the annual charge.

All three measures are subject to wide ranging reliefs covering most situations where the property is held for genuine commercial purposes.

Each of these measures has, to date, only applied where there is a single dwelling with a value in excess of £2 million. Budget 2014 included an announcement that this threshold would be reduced to £500,000.

For the purposes of the 15% rate of SDLT this change comes into effect for acquisitions where the effective date (normally completion but it can be earlier in certain circumstances) is on or after 20th March 2014. However, transitional provisions will ensure that, in most cases, the previous threshold continues to apply where the contract was entered into before 20th March but completed thereafter (this is unlikely to apply where the contract is significantly varied on or after 20th March).

For the purposes of ATED and ATED related gains the reduction in the threshold will be phased in. From 1 April 2015 (6th April for ATED related gains) it will reduced to £1 million, with the ATED charge for properties upto the £2m threshold being £7,000 (this is expected to increase in line with CPI in future years). There will then be a further reduction in the threshold to £500,000 from 1 April 2016 (again, 6th April for ATED related gains), with the ATED charge for properties up to the £1m threshold being £3,500.

As expected the ATED charges for 2014/15 have increased in line with CPI at 2.7% and the rates can be found in the tables in the Appendix.


When the measures were announced in Budget 2012 it was made clear that they were directed against the enveloping of high value residential property. A £500,000 property in London and the South East cannot, by any stretch, be regarded as particularly high value. The stated aim of these measures is to tackle avoidance and ensure those using corporate wrappers with non-commercial motives pay their ‘fair share’ of tax.  The measures are projected to raise £35 million in 2014/15 rising to £90 million in 2018/19.  These are relatively minor sums, though press reports have revealed the predictions for revenue from the original ATED proposals were significantly under estimated.

There will be a significant additional compliance burden in terms of ATED returns and valuation requirements, and it should be noted that this compliance burden for ATED is an annual one affecting both those targeted by the measure and those commercial operators who are not targeted.

Stamp duty reserve tax (SDRT) reform

The 0.5% SDRT charges on the value of surrenders of units or shares in unit trusts and open ended investment companies is to be abolished for surrenders made or effected on or after 30 March 2014. However the charge will be retained for non pro-rata in specie redemptions.


This change was announced in Budget 2013 and is part of a package of measures to make the UK a more attractive domicile for investment funds.

Announcements affecting property investment

The Government has announced it will consult on the SDLT treatment of the seeding of property authorised investment funds (PAIF) and the wider SDLT treatment of co-ownership authorised contractual schemes.


It is interesting to note the Government is consulting further in this area.  In 2012 it abolished the 2% entry charge for enveloping properties within a real estate investment trust (REIT), in part to make managing properties within a REIT’s more competitive compared to the use of PAIF.  Changes have also been recently introduced to the REIT regime to facilitate their holding investments in other REITs.  It is surprising therefore that a consultation on the SDLT costs of seeding investment vehicles does not include REITs.

Business rates in enterprise zones

Businesses will now have until 31 March 2018 to locate in designated enterprise zones in order to claim business rate discounts. The deadline was previously 31 March 2015.


This is another welcome proposal encouraging take up of premises in enterprise zones hopefully further supporting the initial investment required to kick start work in these designated areas.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.